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Sigma: Economic Power Continues To Shift from West to East

Asia Pacific
March 07, 2019

According to the latest sigma report from Swiss Re, emerging markets will remain the growth engine for the global economy and insurance industry over the next decade. The study explores how the seven largest emerging markets will contribute more than 40 percent of global growth in the next decade, with China accounting for over a quarter of the global output.1

The report also examines the factors that will drive insurance premium volume growth in emerging markets over the next 10 years. In this period, emerging market premiums are forecast to more than double, outpacing growth in advanced markets by four times. China is set to take over as the largest insurance market in the world by the mid-2030s.2

"Emerging markets will continue to outperform advanced markets in terms of growth in the next 10 years," says Swiss Re Group Chief Economist Jerome Jean Haegeli. "The shift in economic power from West to East will continue. As this happens, the quality rather than speed of growth becomes the differentiating factor in emerging markets. At the same time, insurance markets will continue to grow at a strong pace, and China is forecast to become the largest insurance market by the mid-2030s."

More Stable Growth, Amid Cyclical and Structural Challenges

Emerging markets currently face cyclical and structural challenges, but they remain an attractive growth proposition relative to the advanced markets. The report examines this optimism, with a key finding that the shift to relatively slower growth will be accompanied by more stable economic growth, a shift from quantity to quality. "Prior to the global financial crisis, the 5 years ahead expected growth differential between emerging and advanced markets was 4.5 percent. It is now 3.5 percent, and this is still a comfortable growth uptick, especially in light of the lower growth levels in advanced markets," said Mr. Haegeli.

Macroeconomic Challenges Scorecard for the EM7 Economies

China and Emerging Asia To Remain the Engines of Insurance Growth

Insurance demand has a strong positive relationship with economic growth. The economic slowdown in emerging markets in recent years has not translated into a corresponding drop-off in premium growth, and underlying consumption momentum for insurance has not been fundamentally eroded.

This sigma forecasts that the emerging market share of global premiums will increase by about 50 percent over the next 10 years, with the long-term premium growth rate for emerging markets 5 percentage points higher than that for the advanced markets. The growth rate in emerging Asia is forecast to be three times the world average over the next 2 years, and China remains on course to be the biggest insurance market by the mid-2030s. Growth in the Latin America and Central and Eastern Europe insurance markets is also projected to accelerate. This will be spurred by factors such as growth-enabling regulation, the adoption of technology, ongoing urbanization, and a push for financial inclusion.

"Insurance has long been a key enabler of economic growth. It is imperative that we continue to support governments, companies, and private citizens to fully unlock growth potential in emerging markets," Jayne Plunkett, CEO of Swiss Re Reinsurance Asia, said. "To do this, we need to strengthen our work creating sustainable, tech-enabled solutions that address increasingly sophisticated and urbanized emerging consumers."


  1. The seven largest emerging economies in terms of gross domestic product are China, India, Brazil, Russia, Mexico, Indonesia, and Turkey.
  2. According to sigma 3/2018, China overtook Japan as the second largest insurance market in the world in US-dollar terms in 2017, with premium volumes of USD 541 billion. The United States is the largest market, with premiums of around USD 1.4 trillion (2017 value).

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